Quest Diagnostics Incorporated
One Malcolm Avenue
Teterboro, New Jersey 07608
Contacts:
Quest Diagnostics Incorporated Unilab Corporation
Cathy Doherty (Investors) 201-393-5030 Brian D. Urban: 818-758-6611
Gary Samuels (Media) 201-393-5700
FOR IMMEDIATE RELEASE
QUEST DIAGNOSTICS TO ACQUIRE UNILAB CORPORATION
IN TRANSACTION VALUED AT $1.1 BILLION
--Combination to enhance customer service and access
for physicians, hospitals and patients--
TETERBORO, N.J., and TARZANA, Calif., APRIL 2, 2002 - Quest Diagnostics
Incorporated (NYSE: DGX), the nation's leading provider of diagnostic testing,
information and services, and Unilab Corporation (NASD: ULAB), the leading
provider of diagnostic testing services in the California market, announced
today that they have entered into a definitive agreement under which Quest
Diagnostics will acquire all outstanding shares of Unilab common stock in a
transaction valued at $1.1 billion, including approximately $200 million of
Unilab debt. In exchange for their Unilab shares, Unilab stockholders may elect
to receive $26.50 in cash, 0.3256 shares of Quest Diagnostics common stock or a
combination of cash and stock.
The aggregate amount of cash payable to Unilab stockholders will be limited to
30% of the total consideration payable for the Unilab shares. The stock portion
of the consideration was calculated based on the average closing price of Quest
Diagnostics common stock for the five trading days ended March 28, 2002.
Unilab reported 2001 revenues of $390 million and has about 4,000 employees.
Quest Diagnostics will acquire all of Unilab's operations, including three
full-service laboratories, 39 rapid-response laboratories, and 386 patient
service centers. The acquisition is expected to be modestly accretive to Quest
Diagnostics' 2002 earnings per share before anticipated charges related to the
transaction. Upon completion of the integration, which is expected to occur
within two years after closing, the transaction is expected to generate annual
synergies of approximately $30 million.
"This transaction will establish a leading position for Quest Diagnostics in the
largest and one of the fastest growing diagnostic testing markets in the U.S.,"
said Kenneth W. Freeman, Chairman and Chief Executive Officer of Quest
Diagnostics. "I am pleased that Bob Whalen, Unilab's Chairman, President and
CEO, will join our team and lead the integration of our California operations.
"Customers will benefit from improved access to diagnostic testing services
through the largest network of conveniently located patient service centers in
the state," Mr. Freeman continued. "The combination will also provide customers
with innovative technologies and an expanded esoteric testing menu from Quest
Diagnostics' Nichols Institute, based in San Juan Capistrano. Customers will
also have available direct physician-to-physician consultations with the
industry's most extensive network of medical and scientific specialists.
Additionally, physician and hospital customers will benefit from our
state-of-the-art electronic connectivity services."
"We are excited about joining the industry leader, a company focused on quality
with strong vision and values," said Robert E. Whalen, Chairman, President and
Chief Executive Officer of Unilab. "Our customers and employees will have access
to the unparalleled medical and scientific expertise of the entire Quest
Diagnostics laboratory network, including its renowned Nichols Institute
esoteric testing laboratory and research and development center. In addition,
Unilab shareholders will have the opportunity to share in the value created by
combining our two companies."
The transaction will be effected as follows: a cash election exchange offer in
which Unilab stockholders who tender their shares will receive, at their
election, $26.50 in cash or 0.3256 shares of Quest Diagnostics common stock in
exchange for each of their Unilab shares, subject to the 30% cap on the total
amount of cash payable to Unilab stockholders; followed by a stock-for-stock
merger in which each Unilab common share not tendered in the exchange offer will
be converted into 0.3256 shares of Quest Diagnostics common stock.
Quest Diagnostics expects that the transaction will close late in the second
quarter. Unilab has approximately 37.4 million shares of common stock
outstanding on a fully diluted basis. If stockholders elect to receive 30% of
the consideration in cash and if all options are exercised, Quest Diagnostics
would issue approximately 8.5 million shares and pay approximately $295 million
in cash to stockholders of Unilab.
Under a separate agreement, Kelso & Co., Unilab's largest stockholder and the
holder of approximately 42% of its currently outstanding common stock, has
agreed to tender all of its Unilab shares into the exchange offer and, under
certain circumstances, sell its shares to Quest Diagnostics if the Merger
Agreement is terminated or the exchange offer does not close.
The transaction, which has been approved by the Boards of Directors of both
companies, is subject to the satisfaction of customary conditions, including the
tender of a majority of Unilab's common stock on a fully diluted basis, and
regulatory review.
Quest Diagnostics intends to pay for the cash portion of the transaction and to
refinance Unilab's existing debt with the proceeds of a new $550 million
one-year bridge loan facility. Quest Diagnostics has received a commitment from
Bank of America, N.A. and Merrill Lynch Capital Corporation for the bridge
facility, which it expects to refinance shortly after the closing.
Quest Diagnostics will discuss the transaction during a conference call for
investors today at 9:00 a.m. Eastern Time. To hear a simulcast of the call over
the Internet or a replay, registered analysts may access StreetEvents at:
www.streetevents.com; and all others may access the Quest Diagnostics website
at: www.questdiagnostics.com. -------------------- ------------------------ In
addition, a replay of the call will be available from 11 a.m. today through 5
p.m. on May 18 to investors in the U.S. by dialing 800-925-2388. Investors
outside the U.S. may dial 402-220-4111. No password is required for either
number.
About Unilab
Unilab Corporation is the largest independent provider of clinical
laboratory testing services in California through its primary testing facilities
in Los Angeles, San Jose and Sacramento and over 400 regional service and
testing facilities located throughout the state. Unilab also operates in the
state of Arizona. Additional information is available on the Company's website
at www.Unilab.com.
Quest Diagnostics
Quest Diagnostics Incorporated is the nation's leading provider of diagnostic
testing, information and services, providing insights that enable physicians,
hospitals, managed care organizations and other healthcare professionals to make
decisions to improve health. The company offers the broadest access to
diagnostic laboratory services through its national network of laboratories and
patient service centers. Quest Diagnostics is the leading provider of esoteric
testing, including gene-based medical testing, and empowers healthcare
organizations and clinicians with state-of-the-art connectivity solutions that
improve practice management. Additional company information can be found on the
Internet at: www.questdiagnostics.com.
FORWARD-LOOKING STATEMENTS:
This communication contains certain forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements,
which may include, but are not limited to, statements concerning the financial
condition, results of operations and businesses of Quest Diagnostics and Unilab
and the benefits expected to result from the contemplated transaction, are based
on management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ materially
from those contemplated by the forward-looking statements.
Factors that could cause or contribute to such differences may include, but are
not limited to, the risk that the conditions relating to the required minimum
tender of Unilab shares or regulatory clearance might not be satisfied in a
timely manner or at all, risks relating to the integration of the technologies
and businesses of Quest Diagnostics and Unilab, unanticipated expenditures,
changing relationships with customers, suppliers and strategic partners,
conditions of the economy and other factors described in the most recent reports
on Form 10-Q, most recent reports on Form 10-K and other periodic reports filed
by Quest Diagnostics and Unilab with the Securities and Exchange Commission.
ADDITIONAL INFORMATION:
Quest Diagnostics is filing today a Form 8-K that will include as exhibits the
Agreement and Plan of Merger among Quest Diagnostics, its merger subsidiary and
Unilab Corporation, and the Stockholders' Agreement among Quest Diagnostics, its
merger subsidiary, Kelso LLC and Kelso L.P. Quest Diagnostics intends to file a
Registration Statement on Form S-4 and a Schedule TO, and Unilab plans to file a
Solicitation/Recommendation Statement on Schedule 14D-9, with the Securities and
Exchange Commission in connection with the transaction. Quest Diagnostics and
Unilab expect to mail a Prospectus, which is part of the Registration Statement
on Form S-4, the Solicitation/Recommendation Statement on Schedule 14D-9 and
related exchange offer materials, including a letter of election and
transmittal, to stockholders of Unilab upon commencement of the exchange offer.
In addition, Quest Diagnostics intends to file a Statement on Schedule 13D
relating to its agreement with Kelso Investment Associates VI, L.P. and KEP VI,
LLC. Investors and stockholders of Unilab are urged to read all of these
documents carefully when they are available. These documents contain important
information about the transaction and should be read before any decision is made
with respect to the exchange offer. Investors and stockholders will be able to
obtain free copies of these documents through the website maintained by the
Securities and Exchange Commission at www.sec.gov. Free copies of these
documents may also be obtained from Quest Diagnostics, by directing a request to
Quest Diagnostics Incorporated at 1 Malcolm Avenue, Teterboro, NJ 07608, or from
Unilab, by directing a request to Unilab Corporation at 18448 Oxnard Street,
Tarzana, CA 91356.
In addition to the Registration Statement on Form S-4, Schedule TO, Prospectus,
Solicitation/Recommendation Statement on Schedule 14D-9 and related exchange
offer materials, both Quest Diagnostics and Unilab file annual, quarterly and
special reports, proxy Statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, Statements or other
information filed by Quest Diagnostics or Unilab at the SEC public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the
Securities and Exchange Commission's other public reference rooms in New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 800-SEC-0330 for further information on the public reference
rooms. Quest Diagnostics' and Unilab's filings with the Securities and Exchange
Commission are also available to the public from commercial document-retrieval
services and at the website maintained by the Securities and Exchange Commission
at www.sec.gov.
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